Exit polls could be big trigger for stock market this week

Markets this week would continue to be volatile and witness sharp two-sided movements.

Second-quarter earnings from blue chips like Reliance Industries Limited and Tata Consultancy Services, inflation data and investment by overseas investors would dictate trading in the holiday-shortened week.

The battle for Maharashtra, which goes to polls along with Haryana, would see exit polls being declared on Wednesday. The Bharatiya Janata Party is expected to be the largest party but whether it is able to form government in the four-cornered contest in Maharashtra and Haryana is to be seen.

Last week had four trading sessions and on three of these days, the Sensex moved 300 points while the Nifty neared 100 points. This indicates the extreme volatility and the state of markets, which seem to react to just about anything and move sharply.

The momentum of markets has broken and we need continuous news flow to keep them going. Though the net fall in the market has not been significant with the Sensex losing just more than one per cent, the fall in Dow Jones of 465 points, or 2.73 per cent, is significant. Foreign institutional investors have turned cautious as well and were net sellers of Rs 1,935 crore during the week while domestic institutions bought shares worth Rs 1,937 crore.

Infosys declared better-than-expected results with its net profit at Rs 3,096 crore, up 28.6 per cent year on year, beating market estimates by miles. The company announced a special interim dividend of Rs 30 per share and a bonus issue of one for one.

While this helped the share post gains of 6.65 per cent post the results, it was a gain of a mere 1.09 per cent on a weekly basis.

Industrial growth in August grew at a slower 0.4 per cent against 0.5 per cent in July. GDP numbers for the quarter ending September could be affected as the first two months of the quarter has seen lower growth compared to the previous quarter. The competing offer from Deepak Fertilisers and Zuari Agro for Mangalore Chemicals would come to an end this week with the offer closing on October 17. While the bid price is Rs 93.60 from Deepak Fertilisers, it is a mere Rs 81.60 from Zuari Fertilisers.

Shareholders of Mangalore Chemicals must sell their shares and exit the company as the price offered is very high due to competitive bidding and is way above fair value. The way of selling could be through open market or tender offer as per the individual's tax planning needs, but investors must sell. In case, you wish to sell the shares in the open market, it should be done by Tuesday as that would be the last day that one could buy and tender shares with Wednesday being a trading holiday. Share prices would tend to soften on Thursday.

Markets continue to look weak and the big trigger could be declaration of exit polls for Maharashtra and Haryana on Wednesday evening. Trade carefully and cautiously.

(The writer is an investment analyst)